Market confidence in Reliance Infrastructure projects returning
With issues related to Reliance Infrastructure power and infrastructure businesses having led to a significant de-rating of the company’s stock in the recent past, the Street has, of late, again started showing confidence in the company’s projects.
Reliance Infrastructure and other infrastructure firms had to bear the brunt of the previous government’s policies as well as slowdown in the economic growth of India. Due to the regulatory risks, the market had written off a huge chunk of the equity which Reliance Infrastructure had invested in some of its projects.
Since proportionate returns were not being generated by the equity which Reliance Infrastructure had invested in its power and infrastructure businesses, the profits of the company were being cut down substantially by the loans it had taken for projects in the mentioned sectors.
As a result, the share prices of Reliance Infrastructure had plunged to a level less than half the book value of the company. But, confidence in the company’s projects is apparently resurfacing on the Street; with the stock witnessing a re-rating. In addition, the market has also started to value equity which it had previously written off.
With the market again showing confidence in Reliance Infrastructure’s projects, the share price of the company has seen a two-fold increase in three months, though the stock still continues to trade at cheap valuations.
Source – Business Standard
industry and markets in which Reliance Infrastructure operates, market again showing confidence in Reliance Infrastructure’s projects, Reliance Infrastructure power, Reliance Infrastructure: More orders hold the key
